Business terms E-N

Business terms E-N

Employee churn Also known as employee turnover. The rate at which employees leave a company.

Employers’ liability insurance Insurance that pays out in the event that an employee suffers an illness or accident in the course of their work. Employers’ liability insurance is a legal requirement for employers.

Enterprise Zone Government-specified areas in which businesses may receive more favourable tax treatment, and other benefits like high speed internet.

Entrepreneur One who starts and/or runs a business.

Equity In finance, equity refers to an ownership interest in an asset. Some business owners choose to sell equity in their business in order to raise capital.

Factoring A process by which a company sells their accounts receivable to a third party, known as a ‘factor’. The factor then collects payment from the debtors.

IR35 Controversial tax rules originally designed to prevent individuals avoiding tax through the use of intermediary companies. The imposition of IR35 can mean that contractors are invidiously treated as employees for tax purposes.
Key Performance Indicator A metric giving an insight into an important aspect of a business. KPIs might include revenue, customer numbers, customer lifecycle time, and so on. KPIs vary from business to business.

Limited company A legal structure in which the company is considered to be a legal entity in its own right, separate from its directors, and in which the directors’ liability is limited to their initial investment.
Limited liability partnership A legal structure in which the business is run as a partnership, but in which each partner’s liability is limited to their initial investment.

Liquidity In practical terms, liquidity refers to a business’s ability to honour its short-term financial obligations. Some assets are considered ‘illiquid’ – meaning that they are not easy to convert into cash.

LLP See limited liability partnership

Loan-to-value Used in mortgages. Refers to the amount being borrowed as a proportion of the property’s total value. So, if a borrower has a 25 per cent deposit, the loan-to-value ratio would be 75 per cent.

LTV See loan-to-value

Markup The difference between what it costs a business to provide a product or service, and the amount they sell it for. Not to be confused with profit margin.
Micro business A business with fewer than 10 employees, and a turnover or balance sheet total of no more than €2 million.

Monetary Policy Committee The Bank of England’s rate-setting body. Responsible for setting the base rate and for quantitative easing.

MPC See Monetary Policy Committee

National Employment Savings Trust A state-run occupational pension scheme, designed to help very small businesses comply with auto-enrolment.National Insurance Contributions Contributions made to a national scheme designed to pay out in the event of illness, unemployment, or retirement. NICs are paid at different levels, known as ‘Classes’.